Bank Reconciliation statement
Definition:-
A form that allows individuals to compare their personal bank account records to the bank's records of the individual's account balance in order to uncover any possible discrepancies.
Usually the reasons for the disagreement are:
1. That our banker might have allowed interests which have not yet been entered in our cash book.
2. That our banker might have debited our account for any such item as interest on overdraft, commission for collecting cheque, incidental charges etc., which we have not entered in the cash book.
3. That some of the cheque which we drew and for which we credited our bank account prior to the date of closing, were not presented at the bank and therefore, not debited in the bank statement.
4. That some cheques or drafts which we have paid into bank for collection and for which we debited our bank account, were not realized within the due date of closing and therefore, not credited by the bank
5. That cheques dishonored might have been debited in the bank statement but have not been given effect to in our books.
Our approach to the bank reconciliation is to prepare two schedules. The first schedule begins with the ending balance on the bank statement. We refer to this schedule as Step 1. The second schedule begins with the ending Cash account balance in the general ledger. We call this schedule Step 2.
|
| Step 2. | Balance per Books on Aug. 31, 2010 | | $ 967 | |
| Adjustments: | | |||
| | – 35 | |||
| | – 110 | |||
| | – 80 | |||
| | + 8 | |||
| Note Receivable collected by bank | | + 960 | ||
| Errors in company's Cash account | | + 9 | ||
| Adjusted/Corrected Balance per Books | | $ 1,719 |
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